You’re paid how much?!

Anna Moyle

 

If you’re a woman reading this…

… could you use your time better if you stopped and instead flicked through the job vacancies at Channel 5, Unilever UK or Ocado?

Why do I ask this, and why them?

The answer is that they are 3 of the very few companies (just 14% of larger employers) that have a gender pay gap figure in favour of women.

April 2018 was the first time that large (250 employees or more) private and public sector employers were required to make public their gender pay gap figures.

By the time the deadline had passed at midnight on 4 April more than 10,000 employers had published this data.

Nobody was surprised to learn that men are paid more than women.  The figures show that 3/4 of large employers pay their male employees more.  There is not a single sector where women can expect to be paid more than (or even the same as) men.

We’ve known for a long time that what women get paid, or rather don’t get paid, is an issue.  The Equal Pay Act was introduced in 1970 so has a claim as the oldest employment related legislation on the books (now incorporated into the Equality Act 2010).

But be careful before jumping to conclusions.  The aim of Equal Pay legislation is to ensure women are paid the same as men if they are carrying out work of equal value.  However the gender pay gap data does not measure this.  Instead, it reveals the salary gap between men and women based on median pay.

In other words if the men and women working at Ryan Air (a company that reported one of the largest gender pay differences) stood in separate lines in order of salary, the woman in the middle of her line earns 71.8% less than the man in the middle of his.

So the gender pay gap data says more about the preponderance of women in part time work and of men in more senior positions than it does about whether employers are breaking the law on equal pay.

So before you resign and apply to work at Unilever UK you need to factor in that their figures reflect the number of men in lower paid manufacturing jobs.  Ryan Air’s gender pay gap (albeit high even for the aviation industry) is also evidence of the fact that only 8 of its 554 highly paid pilots are women compared to 2/3 of its cabin staff.

Employers will have to publish the same information this time next year (and every year thereafter) so we should be able to monitor their progress, or lack of it.

However, 10% of large employers have still not complied with their obligations to publish data.  Commentators are also concerned that the ECHR does not have sufficient resources or powers to force reluctant employers to publish or punish them if they refuse (although its first investigation is apparently due to start in June 2018).

The system may not be perfect and the figures only reveal part of a complex picture, but no other country has initiated such a comprehensive data collection exercise on this issue.

The CEO of the Fawcett Society (which describes itself as the UK’s leading charity campaigning for gender equality and women’s rights) sees gender pay gap reporting as a “game changer” no less because it forces employers to look at themselves and understand their organisations and it prompts employees to ask some hard questions”.

The Equality Act in 2010 made it difficult for employers to enforce the (once common) contractual provisions designed to prevent employees from discussing pay.  With gender pay gap data easily accessible and the higher media profile being given to such issues, employers need to be prepared to have far more conversations with their (usually female) employees questioning their pay when compared with colleagues of the opposite sex.

Those conversations may not be easy for the employer. Just ask the BBC.

In the meantime the rest of us will be watching Ryan Air…

And you thought holidays were supposed to be relaxing…

Anna Moyle

The Employment Appeal Tribunal (EAT) recently announced their decision in 3 separate cases which all looked at the issue of how to properly calculate a worker’s holiday pay. As a result the cases were heard together and the EAT was able to give a single decision. You have probably heard plenty of talk about this already as the EAT’s decision was of such importance to businesses and workers that even the national press has been following the story.

To put it simply, the EAT had been asked to decide how holiday pay should be calculated and in particular whether certain types of payments, such as overtime and commission, should be included in that calculation in addition to a worker’s basic salary. In the event that workers may have been historically underpaid holiday pay, the EAT also needed to decide in respect of how far back a period potentially as long ago as 16 years they should be able to bring claims.

The very real risk to businesses was that they had been historically calculating holiday pay at too low a rate with the result that millions of workers had potential claims for unlawful deductions of wages stretching back for at least 6 years and possibly even as far back as 16 years, which is when the Working Time Regulations became law.

The EAT’s decision means that substantial claims for back payments of holiday entitlements are unlikely, at which businesses can breath a very big sigh of relief. However, many businesses will now have to pay more generous holiday pay because they will need to change the way they calculate this.

To help your business decide how to calculate its holiday pay liability (past and future) and to help you navigate the remaining uncertainties please read the attached guidance.

To read our full briefing note Click Here

Guest Briefing Note – Rm2 on Share Schemes: Back To Basics

Guest Author

We are delighted that Rm2 have contributed a Briefing Note this month. Rm2 has been helping companies set up and run employee share plans since 1998. Their service and expertise covers everything from the overall initial design strategy through to the legal, tax and regulatory details of share schemes.

Rm2 have prepared a briefing note on their specialist subject share schemes exploring the fundamental benefits, potential pitfalls, and overall reasoning behind establishing an employment share scheme.

The note sets out what makes share schemes attractive to employers and staff, exploring ideas of reward structures, sustainable growth and employee retention.

A must-read for any business considering putting in place a share scheme to incentivise and reward staff.

 

Changes to watch out for in April

CarolineLeaver

Below is a round up of the changes in employment law we can expect in the next few weeks:

Employment tribunals and compensatory awards – The maximum compensatory award will increase from £74,200 to £76,574 (subject to the limit of one year’s pay which has existed since July 2013) in respect of dismissals that take place on or after 6th April 2014.

Employment tribunals and a week’s pay – The maximum of a week’s pay increases from £450 to £464 in respect of dismissals and other entitlements on and from 6th April 2014. A week’s pay is used to calculate, amongst other things, the basic award for an unfair dismissal and the statutory redundancy payment.

It is worth bearing in mind that if an employer is about to commence a redundancy process, there will be a saving to the business if the redundancies are completed before 6th April 2014.

Employment tribunals and discrimination questionnaires – Discrimination questionnaires will be abolished from 6th April 2014. Although some employers found questionnaires cumbersome as collating the information could be onerous and they saw little value in them, others found them useful to prompt a quick resolution, either through early settlement or showing that no discrimination took place, and so preventing unnecessary proceedings.

Instead of questionnaires, there will now be a new ‘informal’ approach. The government considers that this non-legislative approach, which is set out in Acas guidance, will be “fairer for all” and that this will enable businesses to better challenge any unreasonable requests for information. The guidance has now been issued by Acas and includes advice on how individuals can ask questions and why employers and service providers should respond. http://www.acas.org.uk/media/pdf/m/p/Asking-and-responding-to-questions-of-discrimination-in-the-workplace.pdf

Therefore, repealing the statutory questionnaire procedure does not prevent individuals who believe that they have been discriminated against from using other means of obtaining information. It will simply remove the statutory mechanism, not the scope for establishing facts about whether discrimination has occurred. There is no legal obligation to answer any questions. However, a Tribunal may look at whether a business has responded and, if so, how they have responded as a factor when considering their decision on a discrimination claim. Also the Tribunal can actually order a business to provide answers as part of the process in any event. These are issues a business would need to weigh up when considering whether to reply and what to say.

Employment tribunals and Acas conciliation – the early conciliation scheme will start on 6th April 2014 and there will be a transitional period between 6th April and 5th May 2014 during which time prospective claimants can participate in early conciliation which will become mandatory in respect of claims presented on or after 6th May 2014. The intention behind the introduction of conciliation periods is to give the parties an opportunity to settle any claims before a claim is submitted, thereby reducing claims and making the tribunal system more effective.

Before lodging a claim, a prospective claimant must send Acas information of the claim in the prescribed manner and then Acas will forward this information to a conciliation officer. The officer must try to promote settlement within one month and if settlement is not reached, either because settlement is not possible in the conciliation officer’s view or the period expires, the officer must issue a certificate to that effect. A claimant may not submit a claim in tribunal without this certificate.

The introduction of fees in the employment tribunal on 29th July 2013 and the effect they have had on the number of employment tribunal claims (please see our earlier blog on this topic) may have a significant effect on the parties’ willingness to settle.

Individuals may be more willing to settle (and may therefore settle for a lower amount) in order to save the issue fee. Employers, on the other hand, may show an increased tendency to “wait and see” whether the claimant is serious, and may therefore be less likely to settle (or less likely to offer anything other than a derisory sum in settlement) until after the fee has been paid.

Only time will tell.

Employment Tribunal statistics: the introduction of fees in tribunals is resulting in a staggering reduction of claims. Is it all good news?

JonathanGolden

Many of us predicted that the introduction of fees in July 2013 for claims in Employment Tribunals would reduce the number of claims being brought. However, none of us anticipated a staggering 79% drop in the number of applications lodged in the last quarter of 2013 (compared with the same period in 2012).

Is it good news for employers? Generally it is because troublesome claimants with weak claims who were clogging up the system and wasting management time and cost seem, for the moment at least, to be a thing of the past. However, there is a sting in the tail because successful claimants can generally expect to recover their fees from employers, and the Employment Appeal Tribunal has recently confirmed that this applies to appeals as well. And as from 6 April 2014, tribunals will also be able to impose financial penalties on employers where it is decided that an employer has acted unreasonably, for example where there has been malice or negligence involved in an employee’s treatment. Penalties will be 50% of the award made to a claimant and subject to a cap of £5,000.

Is it good news for employees? Not really because any penalty awarded goes to the government’s Consolidated Fund and not to them.

Is the new system serving the interests of justice? The government would say it is because it is increasingly taking a utilitarian view of access to justice, namely that a tribunal system which is not bogged down with bad claims and pays for itself must be good for the majority of legitimate claimants because it produces an efficient and sustainable system of justice.

We, and most employment lawyers, feel instead that it is a travesty because the tribunal system no longer serves the people it was set up to protect; individual justice has been lost. True enough, many of the time wasters will be among the 79% of claims not brought, but so too are the majority of the bread and butter claims by employees who have not been paid their salary or who have been summarily dismissed without justification.

Even without being a cynic, it is easy to see that the tribunal system no longer serves the majority of its constituency: for those who can actually afford to pay lawyers (a shrinking minority), the new cap of £76,574 as from April 2014 on normal awards and the inability to recover costs (rather than tribunal fees) even if successful make most claims uneconomic. For the low paid, the lack of a costs regime puts them in the hands of ‘no win, no fee’ lawyers who need a quick solution in order to make claims pay, and who are reluctant to front any fees. The government and employers are happy, as they can report that claims are reducing as are the costs of a bloated system.

I feel that the balance is wrong and there is likely to be a market solution found with both employers and employees having to insure themselves against the possibility of claims, and the insurers acting as gatekeepers, only allowing legitimate claims with good prospects of success to proceed and managing the costs in any claim or defence they support.

Holiday pay – again…..

WynLewis

How long will it be before the calculation of holiday pay stops being a problem?

Not for some time yet, it seems.

In the UK, a worker is entitled to be paid during annual leave at a rate of a week’s pay for each week of leave. Although this is easy to calculate for someone on a fixed annual income (just divide it by 52) or where hours or wages are variable (find the average of the last 12 weeks when there was any income to include in the calculation) it can sometimes become complicated in atypical situations. For example:

  • Overtime isn’t included in the calculation unless it’s guaranteed;
  • Rolled up holiday pay continues to be a problem in that it is technically unlawful in England and Wales (but not in Scotland), but sums already paid under a clear and transparent rolled-up holiday arrangement can be set off against any claim for unpaid holiday pay;
  • Annualised shift premiums for variable work have been challenged; and
  • Buying and selling holiday under flexible benefits schemes runs the technical risk, for employers, that someone who trades in part of their statutory holiday without signing away the right in a settlement agreement might still be entitled to be paid.

The latest layer of complexity relates to whether commission should be included in addition to basic salary. A recent view from the ECJ Advocate General in Lock v. British Gas has thrown two spanners into the works:

  • First, that that holiday pay calculations for staff who have variable income (e.g. basic salary and commission) should have their holiday pay calculated by reference to the combined value of the basic an variable element – which could then result in someone earning more on holiday than they would while working; and
  • Secondly, that the period for calculating holiday pay should be 12 months, rather than 12 weeks (even though it is up to member states to determine their own methodology).

There’s no answer to this yet. And it may affect only a small number of employers, given that such issues tend to be sorted out by agreement. But it would be good to achieve some certainty at some time.

Employment Tribunals -1 : UK Government – nil

CarolineLeaver

It is unusual for a case by an Employment Tribunal to be reported, since published decisions tend to be by the higher courts.  However Tirkey v Chandok and another has been widely reported as pre-empting a proposed change to legislation that is not expected to be made until after public consultation is completed in 2015.

The reason for reporting this particular decision was that the Tribunal decided to include “caste” in the definition of race in the Equality Act 2010 (the Act).  As drafted, the Act does not refer to caste, but the definition of “race” is non-exhaustive and includes “colour; nationality; ethnic or national origin”.  The use of “includes”, rather than “means”, itself means that there is scope for other attributes to be covered by “race”.  One such attribute could be caste.

The caste system is a traditional social stratification, emanating from the Hindu tradition, which encompasses various “classes”, each of which is associated with a traditional occupation and ranked accordingly on a perceived scale of ritual purity.  Caste status is immutable and hereditary, and is often linked to matters such as geographic origin and language. It is associated primarily with South Asia, particularly India.

The nature of caste means that there is an inherent risk of someone from one caste being treated less favourably than someone from another caste.

This case involved a domestic live-in servant who was employed by a couple to work for them originally in India, and then in the UK.  She is part of the Adivasi caste, which is known as a “servant caste” and she brought numerous claims against the couple alleging poor treatment, including being required to work 7 days a week (6am to 12.30am), that she was not allowed to sit on the same furniture as the family, and was made to use separate crockery and cutlery, because higher caste people would not touch plates and cups that she had used.  She claimed that the reason why she was recruited and treated in the manner alleged was that her employers concluded that she was of a lower status to them, and that this view was tainted by caste considerations.

The Employment Tribunal decided that the existing race discrimination provisions in the Act did cover caste, because “ethnic origin” for the purposes of the Act is a wide concept. This was despite an earlier Tribunal decision in which a caste discrimination claim was rejected, partly on the basis that the government had not yet activated the power in the Act to provide expressly for caste to amount to an aspect of race.

As the formal introduction of caste discrimination is delayed until after consultation has been completed (and in theory, there is a risk that the proposal to include caste as an element of race may not happen), this is a useful case. However, as it is only an Employment Tribunal decision, there is scope that it will be appealed, or not followed by a different Tribunal.